Frydenberg says Westpac will bounce back

Treasurer Josh Frydenberg has assured investors, staff and customers that Westpac will bounce back from the crisis which has claimed the scalps of chief executive Brian Hartzer and chairman Lindsay Maxsted.

"These alleged breaches are of the most serious nature. And there needed to be accountability,'' he said.

Mr Frydenberg said Westpac needed to clean itself up given the important role it plays.

"Our financial services sector contributes about 10 per cent of GDP (and) employs more than 400,000 Australians,'' he said.

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"It's a vitally important sector to our economy. And we need to continue to ensure that they uphold the highest standards of professionalism, but also that we have strong financial institutions.

"Because it's our banks that ensure the flow of credit to households for their mortgages and for other borrowings and to businesses as they continue to innovate, to expand, and grow."

Asked if he had concerns for the structural integrity of the bank, especially as it was facing a massive fine, the Treasurer was relaxed.

"I don't think it will compromise Westpac's ability to continue to be an important financial service provider in this country.

"Let's not forget, it's Australia's oldest bank. Let's not forget that millions of Australians have transactions with Westpac and rely on them to be holding their savings or to be providing them with loans to grow their business.

"These are going to be pretty difficult days – not just for the board and for the management of Westpac but, no doubt, for its thousands of employees across the company. But it will get through it and it will continue to play a vitally important role in our economy."

Mr Frydenberg said he spoke on Tuesday with APRA chairman Wayne Byres who confirmed that Westpac executives could be pursued under the Banking Executive Accountability Regime for their inaction over the offences after the BEAR came into effect in July 2018.

"We've boosted the resources of our regulators, we're putting in place a criminal division of the Federal Court and we're taking action onall 76 recommendations of the royal commission," he said.

Shadow treasurer Jim Chalmers said Mr Hartzer "had no option" but to resign but more action was needed to rectify the behaviour of the bank.

"We welcome the decision that he's taken today to step down. There was no other alternative for Brian Hartzer but to step down," he said.

"This decision today doesn't, of itself, fix all of the issues which have emerged in recent weeks about the behaviour of Westpac over a period of some years.

"There's a legal process. I think Australians will be looking for all kinds of accountability when it comes to the behaviour of Westpac.

"They will welcome Brian Hartzer's resignation, but they will be looking for every avenue for the bank to be made accountable for what are appalling, astounding and disgraceful actions, which have been uncovered."

Mr Frydenberg was informed by Mr Maxsted of the decisions before they were announced.

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